Court holds attorney accountable for error in will

Charity sued attorney for loss of intended bequest from woman’s estate

By Denise Woods
The Daily Record Newswire
 
RICHMOND — Will-writing lawyers are wast­ing little time before they start to draft a possible legislative fix for a June 2 decision by the Supreme Court of Virginia that has sparked worries about their long-term liability exposure.

The court upheld a six-figure judg­ment against a Richmond lawyer whose error in will draftsmanship 13 years ago caused a charity to lose out on an intended bequest.

Collection efforts now are underway against the lawyer and his firm, ac­cording to an attorney for the charity.

The ruling stripped away a protec­tive legal blanket that many estate practitioners believed would shield them from claims by disappointed beneficiaries. Now, members of the Vir­ginia Bar Association Wills, Trusts & Estates Section legislative committee are discussing how to rebuild a com­fort zone for their colleagues.

Cat-loving testator

A retired dance instructor who thought of her three cats as “her ba­bies” hoped to leave the felines and her estate to the Richmond Society for the Prevention of Cruelty to Animals if her elderly mother died before her. She hired Richmond lawyer James B. Thorsen to prepare a will to that effect.

The will was executed in 2003. The mother died in 2007 and the testator died the next year.

Thorsen — as co-executor — notified the RSPCA it was the sole beneficiary of the estate and could expect to receive a be­quest worth about $675,000. But a title insurance company spotted a problem: The will appeared to leave only tangible property to the charity, not the more valu­able real estate.

The RSPCA would receive only $72,015.60.

Turning to the courts

Thorsen asked a Chesterfield County judge to correct what he termed a “scriv­ener’s error,” but the judge ruled the will’s language unambiguously excluded real property from the bequest to the Society.

The RSPCA sued Thorsen in Richmond Circuit Court for breach of contract-pro­fessional negligence asserting its status as a third-party beneficiary of Thorsen’s contract to prepare the will.

Hearing the case without a jury, retired Circuit Judge Paul M. Peatross Jr. ruled in favor of the Society and entered judg­ment against Thorsen and his firm for $603,409.90.

As with the trial, the appeal focused largely on the 1989 Supreme Court case of Copenhaver v. Rogers in which re­maindermen under a testamentary trust were barred from pursuing a legal mal­practice action.

That case offered comfort to prac­titioners with its suggestion that the common law requirement for privity of contract would bar exposure for most will-drafting errors.

But the language of Copenhaver was not that broad, the court said. A six-mem­ber majority of the justices ruled that the RSPCA had invoked the proper basis for a valid claim by claiming to be an intend­ed beneficiary of the lawyer’s contract to make a will.

The decision came in Thorsen v. Rich­mond Society for the Prevention of Cruel­ty to Animals.

“Because this cause of action requires that one of the primary purposes for the establishment of the attorney-client re­lationship is to benefit the nonclient, the scope of such claims is necessarily limit­ed,” wrote Senior Justice LeRoy F. Mil­lette Jr. for the majority.

The Copenhaver court had predicted it would be difficult to meet the standard.

“Indeed, it has proved so difficult that this Court has not seen another such case in the nearly three decades from Copen­haver until this day,” Millette wrote.

Nevertheless, the justices said the facts sufficiently alleged that the contract was entered into for the benefit of the testa­tor’s mother and the RSPCA, making the charity not only the intended beneficiary of the woman’s will “but also the intended beneficiary of her contract of employment with Thorsen.”

The evidence that emerged at trial backed up those allegations, the court de­cided.

“Here, a single woman with an un­complicated estate created a simple will devising her entire estate to the only relative with whom evidence suggests she had a close relationship, her elderly mother, or, if her mother predeceased her, a charity with which she had a preexist­ing relation, upon her death. It is a fair inference that the client entered into a contract to draft a will for the purpose of benefiting one of those parties upon her death,” the court said.

The court also rejected a statute of lim­itations defense, holding that no testa­mentary beneficiary has a cause of action prior to the death of the testator.

A specter of extended liability

The lone dissenter, Justice Elizabeth A. McClanahan, sounded a warning, saying the court was breaking with at least six other states by abandoning a privity re­quirement for legal malpractice in testa­mentary cases.

“The majority’s decision to recognize this new cause of action represents a rad­ical departure from the existing law of legal malpractice in Virginia,” the justice wrote.

Lawyers could be liable to an unfore­seeable and unlimited number of people, she said, citing a Texas opinion.

“In the context of estate planning services, the abandonment of the privi­ty doctrine is particularly troublesome since, under the majority’s holding that the cause of action for legal malpractice accrues on the date of the client’s death, an attorney may be held liable for mal­practice decades after the testamentary documents were drafted for the client,” McClanahan wrote.

“Such uncertain and unlimited liability will undoubtedly deter attorneys from of­fering estate planning services,” she said.

The majority decision also threatens the loyalty of lawyers to their clients, since lawyers will have one eye on poten­tial claims from third-party beneficiaries as they prepare testamentary documents, McClanahan said.
Lawyers react

The court’s decision was a “surprise” af­ter almost 30 years of “some comfort,” said Virginia Beach estate planning attorney John T. Midgett, a member of the VBA leg­islative committee.

The bar panel was to discuss ideas for a possible legislative solution to the problem at a June 13 meeting, according to Midg­ett.

One approach might be to allow judges to rewrite the terms of a will to conform to the testator’s intention, if proved by clear and convincing evidence, Midgett said. A similar statute now allows judicial refor­mation of the terms of a trust.

“It’s probably too early to determine what course” the panel might take, said another member, James P. Cox III of Char­lottesville.

“There is concern among estate plan­ners that this decision represents a sea change in the law affecting attorneys’ vul­nerability to malpractice cases,” Cox said.

Given the court’s ruling on the stat­ute of limitations, Cox said exposure is open-ended.

“This is something that could lie dor­mant for decades before a potential claim could raise its ugly head,” he said.

The RSPCA was represented by Mi­chael S. Lieberman of Alexandria. He said there is no available malpractice insur­ance coverage and efforts are underway to determine what assets may be available to satisfy the judgment.
“That process is just beginning,” Lieber­man said.

Lieberman said the Society’s legal team was well aware of the opening provided by the Copenhaver decision and was able to craft pleadings that would “thread the needle.”

“The facts actually fit. It didn’t take much to find it,” he said.

Lieberman discounted McClanahan’s concerns, saying lawyers can easily pro­tect themselves with carefully worded re­tainer agreements.

“It’s really not a sea change as the dis­sent would have you believe,” he said. “It’s easy to protect yourself from it and easy to do a good job, as well.”

Thorsen and his firm were represented by Charles M. Allen of Richmond. He did not immediately respond to a request for comment.